This course provides an introduction into the principles of environmental economics, with a focus on policy applications. The principal problem in any economics course is how to best allocate scarce resources. This holds true for environmental economics as well. However, environmental resources differ from other goods that economists study in that there is usually no market for them. Thus, government policies are needed to maintain and improve environmental quality. Similar considerations will be made for natural resources, both exhaustible and renewable, where policies are needed to determine the optimal rate of exploitation.
Expected learning outcomes
At the end of the course students will able to analyze an environmental problem from an economic perspective using the economist's toolbox. Students will be able to identify the environmental problem and its economic consequences and to suggest the policy measures to deal with it. In addition, students will be able to tackle economic problems involving pricing and extraction of natural resources, with special reference to oil. Students will be able to autonomously analyze economic problems involving environment and natural resources in a rigorous way, explain the main concepts of environmental and natural resource economics, autonomously develop further knowledge related to environmental and natural resource economics, communicate economic analyses on natural resources and the environment.
An introduction to natural resource and environmental economics; The origins of the sustainability problem; Welfare economics and the environment; Pollution control: targets and instruments; Cost-benefit analysis; Valuing the environment; The efficient and optimal use of natural resources; The theory of optimal resource extraction: non-renewable resources; Stock pollution problems; Renewable resources; International environmental agreements.
Prerequisites for admission
Math and Microeconomics
Power point presentations by the teacher will be made available on the course website. A textbook and additional readings will be suggested at the beginning of the course. Suggested textbooks are: 1) D.W. Pearce and R.K. Turner (1990), Economics of Natural Resources and the Environment, Harvester Wheatsheaf; 2) R.Perman, Y. Ma, M. Common, D.Maddison, J. Mcgilvray (2011), Natural Resource and Environmental Economics, Pearson Education (4th edition) (more complete - more advanced).
Assessment methods and Criteria
Written exam. Problem sets might be distributed during the course. Students are requested to solve them and hand in the solutions. Depending on the number of students attending, a project and a presentation, either individually or as a group, may have to be prepared. Problem sets and project will be evaluated toward the final grade.